On-chain data shows that the Bitcoin exchange inflow trend has recently been at its lowest level in almost a decade, a sign that could be bullish for the asset.
Bitcoin exchange flows have declined recently
As CryptoQuant author Axel Adler Jr pointed out in a job on X, BTC exchange flows have been declining for some time now. THE “foreign exchange influx” is an on-chain indicator that tracks the total amount of Bitcoin that investors deposit into wallets attached to centralized exchanges.
When the value of this metric is high, it means that holders are currently transferring a large number of coins to these platforms. Since one of the main reasons investors may deposit coins on exchanges is for selling purposes, this type of trend can be bearish for the asset.
On the other hand, the low indicator implies that exchanges are currently not receiving many deposits. Depending on the trend of the opposite metric, the exchange exitsuch a trend can be either bullish or neutral for the price of the cryptocurrency.
Now here is a chart that shows the trend of Bitcoin exchange inflow over the past decade:
The value of the metric seems to have been going down in recent weeks | Source: @AxelAdlerJr on X
As seen in the chart above, the Bitcoin Inflow exchange is currently trending at 20,000 BTC, the lowest value the market has seen since 2015.
The analyst also attached the indicator’s 365-day moving average (MA) data to the same chart. This line has been declining since February 2018, going from 90,000 BTC to 36,000 BTC today.
The decline in exchange flows could indicate that the appetite for selling cryptocurrency has diminished. If so, due to how supply-demand dynamics work, the price could naturally benefit from an upward effect from this trend.
However, there could be another explanation for this long-term trend, namely the fact that stock exchanges have not played a consistent role in the market throughout these years.
During the 2017 cycle, exchanges were big in the market and therefore actively receiving huge deposits. Yet, during the 2021 cycle, new ways to invest in Bitcoin emerged, which may explain why the decline occurred between the two periods.
Today, Bitcoin finds itself in an era where spot exchange-traded funds (ETFs) have gained approval and are attracting considerable demand.
With these ETFs, cryptocurrency exchanges will necessarily have lost more relevance, which is why it appears this cycle will see even fewer deposits than the 2021 era.
BTC Price
Bitcoin had recovered beyond $65,000 earlier in the past day, but the asset appears to have fallen, as it is now back down to $63,100.
Looks like the price of the coin has been heading up over the last few days | Source: BTCUSD on TradingView
Featured image of Kanchanara on Unsplash.com, CryptoQuant.com, chart from TradingView.com
